Investors entered 2023 with trepidation, mindful of the previous year's turbulence and remained wary about recession risks, geopolitical unrest, and potential rate hikes. Yet, as the year unfolded, the bond market revealed a resilient streak.
Despite volatility peaks, with the 10-year Treasury yield hitting 5% before receding to 3.88%, the government bond market managed to find equilibrium, closing the year on a stable note. This stabilization was buoyed by anticipations of rate reductions, a sturdy American economy, and a softening dollar, which collectively benefited riskier bond segments, including emerging market debt.
A Year of Recovery and Records
The fixed income ETF landscape mirrored this recovery, with several segments posting impressive gains:
This resurgence culminated in a milestone for the primary global fixed income ETF markets in Europe and North America, which reached a historic total AUM of $2 trillion by the end of 2023, nearly doubling from $1.12 trillion in 2019.
Despite volatility peaks, with the 10-year Treasury yield hitting 5% before receding to 3.88%, the government bond market managed to find equilibrium, closing the year on a stable note. This stabilization was buoyed by anticipations of rate reductions, a sturdy American economy, and a softening dollar, which collectively benefited riskier bond segments, including emerging market debt.
A Year of Recovery and Records
The fixed income ETF landscape mirrored this recovery, with several segments posting impressive gains:
- Global Sovereign Bonds: Marked a recovery with a 4.44% return, a significant turnaround from the previous year's loss.
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- Corporate Bonds: Both global and investment-grade segments saw substantial upticks, with returns of 8.52% and 7.80%, respectively, indicating a robust recovery from their 2022 slumps.
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- High-Yield Corporate Bonds: Led the recovery efforts with a 10.67% return, signaling a strong comeback.
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- Emerging Markets Debt and Other Segments: Also showed positive momentum, contributing to the broader fixed income recovery narrative.
This resurgence culminated in a milestone for the primary global fixed income ETF markets in Europe and North America, which reached a historic total AUM of $2 trillion by the end of 2023, nearly doubling from $1.12 trillion in 2019.
